The International Monetary Fund (IMF) slightly improved its forecasts for global economic growth on Tuesday, mainly based on good performance in the United States and emerging economies such as India and Brazil. There is also more optimism for Belgium, but this does not apply to the entire eurozone.
In its latest ‘World Economic Outlook’, the IMF expects the world economy to grow by 3.2 percent this year, compared to 3.1 percent growth in January. The forecast for 2025 remains unchanged at 3.2 percent.
Despite the improved forecast, the IMF warns that high borrowing costs and withdrawal of government support will weigh on near-term growth, and medium-term forecasts remain at the lowest levels in decades due to low productivity and global trade tensions.
In contrast to a significant improvement in expected economic growth in the United States (from 2.1 percent in January to 2.7 percent now), there is a more gloomy outlook for the euro zone. Growth there would be only 0.8 percent this year and 1.5 percent in 2025. Previously, the IMF assumed 0.9 and 1.7 percent respectively.
It remains an improvement compared to economic growth of barely 0.4 percent in 2024. “Growth in the eurozone will recover, but from a very low level, as previous shocks and a tight monetary policy weigh on activity,” says IMF chief economist Pierre-Olivier Gourinchas in a press release.
Belgian get well soon
The forecasts differ per country. For example, in Germany, the largest economy in the eurozone, hardly any growth is expected this year (+0.2 percent, compared to +0.5 percent in the previous outlook). In contrast, the IMF is slightly more positive about growth in a number of smaller countries in the euro area, such as Portugal and Belgium. The Belgian economy would grow by 1.2 percent in both 2024 and 2025, after +1.5 percent in 2023. In October last year, the IMF thought that Belgium would not reach one percent growth in 2024.